Kexim readies first deal since February

The Korean quasi-sovereign hires Barclays, Credit Suisse, Morgan Stanley and UBS for a new dual-tranche benchmark offering.
Barclays, Credit Suisse, Morgan Stanley and UBS have been mandated to lead a proposed dual currency Reg-S 144a $1 billion benchmark bond deal for the Export-Import Bank of Korea (Kexim). The deal is expected to have a five-year FRN component and a 10-year fixed rate component.

The leads will not be conducting a roadshow for the deal; however pricing is expected no later than Wednesday depending on the progress of the bookbuild. Initial guidance on the respective tranches was released on Monday afternoon at the low- to mid-20s over Libor level for the FRN and low- to mid-30s over mid-swaps for the fixed-rate notes.

This deal is somewhat reminiscent of Kexim's initial international debt markets offering in 2006 - a $1 billion dual-tranche global bond that came to market in February. That deal was split into a $600 million five-year fixed-rate offering and a Ç325 million seven-year FRN tranche.

When that deal was issued, the dollar-denominated tranche was priced at 99.496% on a coupon of 5.125% to yield 5.241%, 71.5bp over Treasuries, 20bp over mid-swaps, or 19bp over Libor. The Euro FRN, the first time Kexim went to market with a seven-year maturity, priced at par to yield 24bp over Euribor.

As usual, Kexim will look to price as close to or through its existing five- and ten-year curve with its latest transaction. KeximÆs five year section of the curve, represented by a $400 million 4.625% 2010 deal was trading at a bid-offer spread of 73bp to 69bp over US Treasuries, on a mid-swaps basis it was quoted at 25bp over. While its ten-year curve, represented by a $600 million 5.125% 2015, was quoted at 84bp to 80bp over comparable Treasuries or 29bp to 30bp over mid-swaps

Based on KeximÆs annual financing requirements, bankers estimate that this issuer will seek to raise upwards of $3 billion in total from the debt capital markets this year. Given that it has already completed deals worth $2 billion, Kexim could still have an additional $1 billion to bring to market following the completion of this recent transaction.
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